Fernando Gago signed for Real Madrid on Friday until 2013 after successfully passing a medical exam.
"We've signed one of the best midfielders in the world," said Madrid president Ramon Calderon at the official presentation of the 20-year-old Argentine at the Santiago Bernabeu Stadium.
The former Boca Juniors midfielder cost the Spanish powerhouse euro20 million (US$26.3 million), according to the Argentine club. Gago signed a contract till 2013 in the presence of Calderon, honorary president and former star player - also born in Argentina - Alfredo Di Stefano and sports director Pedja Mijatovic, the club said in a statement.
"I am very excited by the thought of arriving at my dream club and of achieving great objectives," Gago said. "I'm going to help take Real Madrid to the highest possible levels, I have this idea of winning in European soccer and of continuing to add to the titles I won with Boca in Argentina."
On Thursday, Madrid unveiled Gonzalo Higuain, who completed a euro13 million (US$17.1 million) move from River Plate to Real Madrid when he signed a 6 1/2-year contract.
Gago and Higuain are two of three young South American soccer players Madrid has acquired for the January transfer window - costing a total euro39 million (US$51.3 million) - in an attempt to inject fresh blood into an aging team, which last won a major trophy in 2003
Last month, Madrid signed 18-year-old Brazil left-back Marcelo from Fluminense for a reported fee of euro6 million (US$7.9 million).